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Town in Limbo Until Council Makes Decision on Impact Fees

Londonderry Finance Director Doug Smith has presented the year-end summary
for impact fees returned for the period ending on June 30.

And until the Town Council lifts its suspension on the collection of fees or
decides to do away with the practice, with a disposition for any remaining
funds, the Town will continue paying out fees as they expire, according to
Smith.

“At this point, it is simply that fees are expiring and we are returning
them,” he said. “There are no projects at this point that can be consummated
with those fees.”

The total impact fee deductions for the period ending June 30 total $79,031,
and the ending balance is $281,296.

The Town ran into trouble with its previous formula for collecting impact
fees in January 2013, when a Rockingham Superior Court decision found the
Town’s impact fee program, in place since 1994, had been at times contrary
to legal requirements, and parties who had paid the illegal fees were due
refunds.

The court ordered the Town to hire an independent auditor to evaluate its
impact fee collections and expenditures since 1994.

In its final report for the audit, dated Aug. 7, 2013 and recently posted to
the Town’s website at www.londonderrynh.org, Melanson Heath and Company
detailed missing records, incomplete and inaccurate information in the
impact fee schedules, impact fees not assessed, impact fees not collected,
impact fees collected but not turned over to Finance for deposit, and
expirations the Town did not sufficiently monitor.

There were instances where impact fees were assessed, but there was no
evidence the fees were collected. In some cases no certificate of occupancy
had been issued yet the building was in fact occupied. And in other cases a
certificate of occupancy was issued yet collection of the fee could not be
verified, according to the auditing company.

In some cases, the auditor found evidence of an impact fee being deposited,
but no evidence of the fee being assessed or collected in the Building
Department files.

The auditor further reported, “Records pertaining to impact fee calculations
were retained by the Town. Copies of the Impact Fee Calculation Forms, with
the exception of the last page, were not retained in the Building Department
files. The Finance Office did not retain the Impact Fee Calculation Form in
their files for most of the periods reviewed.”

The Town’s auditor was only able to locate the Impact Fee Calculation Forms
for FY2006 and FY2012, forward.

Accordingly, some of the impact fees contained in the schedules could not be
verified as having been received and deposited. In many cases, the auditor
was forced to identify or verify the various categories based on the
standard fees charged during certain periods of time and in certain
neighborhoods.

Moving forward, the Town will continue returning the illegally collected
impact fees until the Council makes a decision on how to proceed, according
to Smith.

“We are really just in limbo until a final decision is made to do away with
the fees or to continue to collect them,” he said. “If so, we would have to
determine how in terms of the methodology to collect, and have a study to
determine the proper calculations.”

Peter Curro, who served as Finance Director during the first couple of years
impact fees were collected, said the decision to begin collecting impact
fees was made in the Planning Department under previous leadership.
“He did a calculation on how much impact for a house, three- or
four-bedrooms, assessed an impact fee, and that’s really all we were doing,”
he said.

When Curro, who is now with the School District, left the Town post, Sue
Hickey replaced him as finance director.

“It was very much a joint effort,” Geographic Information Services Manager
John Vogl said. “The building department collected the fees, the Finance
Department assigned the values. There were a lot of players involved. I
don’t know that there was one single person tasked with being the
administrator of the program.”

“As a result of the audit, the Council suspended the program as soon as all
the issues came out with it. All the expired fees are being returned every
six months, and we’re holding off on doing anything with the remaining funds
until the courts come out with a final decision,” Town Manager Kevin Smith
said.

The Supreme Court is expected to issue a decision soon, according to Kevin
Smith, who anticipates the Council will consider what to do with the
remaining funds as soon as September.